Listed equity

Responsible investment allows listed equity investors to make better informed investment decisions by integrating all material factors, including material ESG factors, into investment analysis, valuations and decisions. To hear more about our listed equities work, contact us.

A practical guide to ESG integration for equity investing

A practical guide to ESG integration for equity investing

To guide investors – both asset owners and investment managers – who are implementing ESG integration techniques in their investment decisions and processes, this report is the most comprehensive description to date of what ESG-integrated analysis is, and how it works in practice.

The ESG integration model

ESG integration techniques for equity investing

ESG factors can be integrated throughout a listed equity portfolio, right across the active-to-passive spectrum.

Oddo extended balance sheet

ESG integration in sell-side equities research

Sell-side brokers integrate ESG information with traditional financial information – by leveraging their financial information systems, their access to company management, and the expertise of mainstream, sector-focused investment analysts – to improve research.

The impact of ESG integration on the investment process

Fully integrating ESG factors into a new or existing investment process takes time and often requires trial and error. Many variables are involved and approaches differ between organisation and even between teams.

Active ownership

A practical guide to active ownership in listed equity

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This report outlines concrete steps to make active ownership an effective tool to support long-term value creation in listed equity investing.

rei as third dimension

Developing an active ownership policy

The first phase of active ownership involves reviewing the investor’s overall investment strategy, including the vision, mission and investment principles of the organisation.

Engagement and voting practices in listed equity

The first step to identify targets for engagement is setting up regular monitoring of investee companies on ESG issues which represent value at risk or potential opportunities for long-term financial performance and impact on the real economy.

Assessing external managers and service providers in listed equity investing

When investors decide to partially or fully outsource their active ownership activities to investment managers or specialised service providers, defining criteria to select, appoint and monitor third parties is crucial.

Transparency: A key component of active ownership

Transparency is a key component of active ownership and it forms part of many stewardship codes and principles (i.e. Principle 6, the ICGN Global Stewardship Principles, the OECD Responsible Business Conduct for Institutional Investor and several national stewardship codes).

Collaboration Platform

Join forces on the PRI Collaboration Platform

The Collaboration Platform is a unique private forum that allows signatories to pool resources, share information and enhance their influence on ESG issues.

Quantitative strategies

ESG integration in quantitative strategies

ESG integration has historically only been associated with fundamental strategies, but this perception is slowly changing as several quant managers are now integrating ESG factors into their valuation models and investment decisions.

Smart beta strategies

ESG integration in smart beta strategies

In smart beta strategies, ESG factors and scores can be used as a weight in portfolio construction to create excess risk-adjusted returns, reduce downside risk and/or enhance portfolios’ ESG risk profile.

Passive strategies

ESG integration in passive and enhanced passive strategies

Some investors believe that as a manager cannot make active investment decisions in passive strategies, ESG factors cannot be integrated in passive investments as this may cause performance to deviate from the benchmark’s. Passive strategies can incorporate ESG factors, however.

Selecting managers

Considering ESG integration in manager selection

Selecting an investment manager that can act in accordance with an asset owner’s investment preferences requires thorough due diligence of the manager’s investment approach and performance, investment process, stock selection and portfolio construction decisions.

Monitoring managers

Monitoring managers' ESG integration

To review investment performance and managers’ integration practices, asset owners: organise periodic monitoring meetings with investment managers; ask them to complete questionnaires/regularly report; and/or use methods such as peer analysis, internal scoring systems and portfolio analytic tools.